Post by: yagurl on Nov 23, 2022
The graph shows a Lorenz curve.
For Iniquus, the area of A=375 and the area of B=750. What is the Gini coefficient? Suppose that in Aequus, the area of A=210 and the area of B=915. What is the Gini coefficient? Which country has more income inequality?
Please round your final answer to two decimal places.
◦ 0.50, 0.23, Iniquus
◦ 0.33, 0.19, Iniquus
◦ 0.50, 0.23, Aequus
◦ 0.33, 0.23, Aequus
Post by: nora9826 on Nov 23, 2022
The Gini coefficient is one way of summarizing information in the Lorenz curve. It is equal to the area between the line of perfect income equality (the 45 degree line) and the Lorenz curve divided by the whole area below the line of perfect equality.
In this example, Gini coefficient = area of A/(area of A + area of B).
For Iniquus, the area of A=375 and the area of B=750.
Gini coefficient= 375/(375+750) = 375/1,125 = 0.33
For Aequus, the area of A=210 and the area of B=915.
Gini coefficient = 210/(210+915) = 210/1,125 = 0.19
A Gini coefficient of 0 means complete equality, while a Gini coefficient of 1 means complete inequality. Therefore, the country with the Gini coefficient closest to 1 has more income inequality. In this example, Iniquus.